The financial media much like the political media loves a good crisis and is FULL of misinformation and dishonesty. The latest is how the markets will react in case of an impeachment.
I have written and spoken to you about this before and its always important that you understand that the political games in Washington typically don’t matter very much outside of Washington. The media (and many financial advisors), even outside of impeachment, always seems to think that they;
- absolutely know why markets move,
- how will they move, and
- what exactly you need to do NOW.
I will tell you that if you listen to the media and many financial pundits, you will ABSOLUTELY fail in your retirement.
Let’s understand that in our history only two presidents have gone through the impeachment process. Andrew Johnson in the 1800’s, and Bill Clinton. (Let’s understand that no president has ever been removed and Richard Nixon resigned). In all of these past cases (taking away Andrew Johnson because the market wasn’t really around in the 1800’s), there is absolutely ZERO correlation that an impeachment proceeding is detrimental to the stock market. Especially in the long-term.
If you want to understand markets you MUST understand that markets are very efficient. What that means is that every second of the day the market is adjusting to predictable and knowable information and the behaviors of 7,000,000,000 people on the planet. The fact that Donald Trump could get impeached has already priced into the market way before his inauguration. Not one person, financial pundit, or money manager can predict with any certainty what will happen next. However, there will be no absence of them telling you they can.
As as we move forward in the next few weeks remember these two facts:
- The chances that Donald Trump will be removed from office is extremely low. If he would have the misfortune to get removed, you get President Mike Pence. So there will be absolutely no change.
- Investors should always keep politics out of their portfolio.
Politicians often think that they have more control of markets or economy than they actually do. Markets don’t care nearly as much about politics as you would assume. Sure, there is always short-term swings but at the end of the day the stock market eventually will win out.